85R4770 KFF-D     By: Bettencourt S.B. No. 1752       A BILL TO BE ENTITLED   AN ACT   relating to authorizing certain municipalities to establish   defined contribution plans to provide retirement benefits to   certain employees.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle A, Title 8, Government Code, is amended   by adding Chapter 808 to read as follows:   CHAPTER 808.  AUTHORITY OF CERTAIN MUNICIPALITIES TO ESTABLISH   DEFINED CONTRIBUTION PLANS   SUBCHAPTER A. GENERAL PROVISIONS          Sec. 808.001.  DEFINITIONS. In this chapter:                (1)  "Defined benefit plan" means a plan provided by a   public retirement system that provides participants specified   benefit payments calculated in accordance with a formula that is   based on factors such as a participant's earnings history, age, and   years of service.                (2)  "Defined contribution plan" and "public   retirement system" have the meanings assigned by Section 802.001.                (3)  "Qualified plan" means an employee benefit plan   qualified under Section 401(a), Internal Revenue Code of 1986 (26   U.S.C. Section 401).          Sec. 808.002.  APPLICABILITY. This chapter applies only to:                (1)  a public retirement system that provides benefits   to municipal employees under a defined benefit plan; and                (2)  a home-rule municipality that is the sponsoring   authority of a public retirement system described by Subdivision   (1).          Sec. 808.003.  CONFLICT OF LAW. To the extent of a conflict   between this chapter, including an ordinance adopted by a   municipality or a rule adopted by a public retirement system under   authority of this chapter, and any other law, this chapter   prevails.   SUBCHAPTER B. AUTHORITY TO CREATE DEFINED CONTRIBUTION PLAN          Sec. 808.051.  ELECTION TO ESTABLISH DEFINED CONTRIBUTION   PLAN. (a)  On receipt of a petition requesting the election signed   by a number of registered voters of the municipality equal to at   least 10 percent of the number of voters who voted in the most   recent election of the municipality, the governing body of a   municipality shall order an election to authorize the creation of a   defined contribution plan for newly hired municipal employees or a   category of newly hired municipal employees in accordance with this   section.          (b)  An election ordered under this section must be held as   part of the next regularly scheduled general election for municipal   officials that is held after the date the governing body of the   municipality orders the election and that allows sufficient time to   prepare the ballot in compliance with other requirements of law.          (c)  The ballot for an election ordered under this section   shall be printed to permit voting for or against the proposition:   "Authorizing           (name of municipality) to establish by   ordinance a defined contribution plan for (insert "employees" or   the category of employees to receive benefits under the plan)   initially hired by the municipality on or after (insert date) as   provided by state law."          (d)  An election ordered under this section must be held and   the returns prepared and canvassed in conformity with the Election   Code.          (e)  If an election authorized under this section is held,   the municipality may implement the other provisions of this chapter   only if a majority of the votes cast at the election favor the   proposition.          Sec. 808.052.  CREATION OF DEFINED CONTRIBUTION PLAN.   Notwithstanding any other law, including Title 109, Revised   Statutes, and subject to the requirements of Subchapter C, if   authorized by an election under Section 808.051, the governing body   of a municipality that is the sponsoring authority of a public   retirement system shall establish by ordinance a defined   contribution plan to be administered by the public retirement   system to provide benefits to newly hired municipal employees or a   category of newly hired municipal employees, as applicable, under   the plan instead of under a defined benefit plan.   SUBCHAPTER C.  MINIMUM REQUIREMENTS FOR DEFINED CONTRIBUTION PLAN          Sec. 808.101.  MINIMUM REQUIREMENTS. In establishing a   defined contribution plan under this chapter, the governing body of   a municipality shall ensure the plan meets the requirements of this   subchapter.          Sec. 808.102.  QUALIFIED PLAN. A defined contribution plan   created under this section must be a qualified plan.          Sec. 808.103.  PARTICIPATION IN DEFINED CONTRIBUTION PLAN;   RESUMPTION OF SERVICE.  (a)  In the ordinance establishing a defined   contribution plan under this chapter, the governing body of a   municipality shall designate the date by which all newly hired   municipal employees shall begin participation in the plan.          (b)  A person who resumes employment with a municipality and   who is already eligible to participate in a defined benefit plan   administered by a public retirement system because of the person's   prior employment remains eligible to participate in the defined   benefit plan and is not considered a new employee for purposes of   required participation in a defined contribution plan established   under this chapter.          (c)  Notwithstanding any other law, an employee who   participates in a defined contribution plan established under this   chapter is not eligible to, and may not participate in, the defined   benefit plan administered by a public retirement system.          Sec. 808.104.  EFFECT OF EMPLOYMENT CHANGES. A person   participating in a defined contribution plan continues to   participate in the plan when the person changes employment to   another position included in the coverage of the public retirement   system.          Sec. 808.105.  VESTING OF BENEFITS; TERMINATION OF   PARTICIPATION.  (a) Benefits in a defined contribution plan vest in   a participant not later than the fifth anniversary of the date the   person begins to participate in the plan.          (b)  A person terminates participation in a defined   contribution plan, without losing any vested benefits, by:                (1)  death;                (2)  retirement; or                (3)  termination of employment in all positions   included in the coverage of the public retirement system.          (c)  The benefits of a product purchased under a defined   contribution plan become available under the terms of the annuity   but not before the earlier of the date:                (1)  the member terminates participation as provided by   Subsection (b); or                (2)  the member's age and years of service in a position   covered by the plan equal 80.          Sec. 808.106.  CREDITABLE SERVICE. A person may not   establish in the defined benefit plan administered by a public   retirement system credit for service performed during a period the   person was participating in a defined contribution plan.          Sec. 808.107.  CONTRIBUTIONS. (a)  A participant in a   defined contribution plan shall make contributions to the plan at   the same rate that a participant in a defined benefit plan   administered by the same public retirement system is required to   make for current service, and the municipality shall make   contributions to the defined contribution plan for each participant   in the defined contribution plan at the same rate as the   municipality is required to contribute for contributing   participants in the defined benefit plan administered by the same   public retirement system. Contributions required under this   subsection shall be credited to the benefit of the participant in   the defined contribution plan.          (b)  A participant in a defined contribution plan and the   municipality shall execute an agreement under which the salary of   the participant is reduced by the amount of the contribution   required by this section. An agreement under this subsection is   irrevocable until the participant terminates participation in the   plan under Section 808.105.          Sec. 808.108.  HEALTH BENEFITS AND OTHER COVERAGES.   Notwithstanding any other law, a person who participates or who is   eligible to participate in a defined contribution plan established   under this chapter is eligible for health benefits and other   coverages to the same extent as a person who participates in a   defined benefit plan administered by the same public retirement   system.          SECTION 2.  This Act takes effect September 1, 2017.